The Fonz on Social Skis? Walmart’s $300m+ social commerce investment

So Walmart, the world’s largest retailer has decided to vote for social commerce with its wallet.  $300m for a social media startup to combine social media, shopping and mobile.  The startup in question, Kosmix (Wiki entry), is right now in the business of ‘taming social media overload’ by tracking, filtering and re-publishing quality social media content (RightHealth, TweetBeat), and the team Behind Kosmix has good e-commerce credentials (Amazon (Marketplace), Ebay, and Junglee (a shopping database/search engine purchased by Amazon in 1998)).

[blockquote]“We are expanding our capabilities in today’s rapidly growing social commerce environment. Social networking and mobile applications are increasingly becoming a part of our customers’ day-to-day lives globally, influencing how they think about shopping, both online and in retail stores. We are excited to have the Kosmix team join us to accelerate the development of our social and mobile commerce offerings.” Eduardo Castro-Wright, Walmart vice chairman[/blockquote]

Little detail as to how Kosmix – now @WalMartLabs – will be recombining the enigmatic social-shopping-mobile trinity to deliver value for Walmart and its customers. There’s a lot of talk about a ‘Social Genome’ platform that builds profiles of users, topics, products, places, and events to take “search, personalisation, and recommendations to the next level”, but nothing concrete. At the very least, @WalMartLabs technology should help Walmart better understand, and therefore cater to, the tastes and preferences of its customers.  But Kosmix co-founder Anand Rajaraman hints at something bigger:

[blockquote]“We are at an inflection point in the development of e-commerce… The first generation of e-commerce was about bringing the store to the Web. The next generation will be about building integrated experiences that leverage the store, the Web and mobile, with social identity being the glue that binds the experience.”[/blockquote]

Walmart is not known as a digital pioneer, and as others have noted, the behemoth has struggled with digital in the past, so the investment in social commerce is either a sign that social commerce has really gone mainstream – or as cynics will claim, that Walmart and/or social commerce has jumped the shark.

If Walmart isn’t to become the Fonz on social skis, then we think that whatever @WalMartLabs does, it should build on it’s core money-saving value proposition.

The Walmart brand is all about saving money – and it follows that any deployment of social commerce should be to build this brand proposition – anything else could undermine the brand and become a costly diversion for Walmart. Which is why, pima facie, it might seem odd that Walmart gobbled up Kosmix, rather than followed in Amazon’s $175m footsteps and take a bite out of a group-buy platform. Of course, if Walmart’s social commerce push will involve helping consumers use social media to save money – then it all makes sense.

The Walmart deal aside, we believe smart social commerce in general should be about building your brand – create choice-shaping associations in the mind of the audience – by delivering value on what you stand for – or what you want to stand for – in the mind of your audience. So start with what you stand for and work back. If you don’t take a brand-led approach, you run the risk of deploying social for social’s sake in a costly diversion that could get in the way of a sale.

If this makes sense, and there’s no shark jumping going on, expect Walmart’s crowdsaver experiment to get a new lease of life, and don’t be surprised if check-in deals and group-buy deals figure prominently in Walmart’s digital future.